India's airbag market could touch Rs 2,300 cr by 2020

India's airbag market could touch Rs 2,300cr by 2020


Government's increased focus on upgrading safety standards in cars sold in India will result in a windfall for producers of airbags.

The potential market opportunity for airbags in India could swell to Rs 1,900-2,300 crore by 2019-20, according to research and rating agency ICRA. Presently the airbag market in India is estimated to be at Rs 600-800 crore.

All new models launched after October next year will have to undergo crash tests and post October 2018 vehicle manufacturers will have to provide airbags and anti-locking braking system on all models as standard.

After many of the best selling models in India failed crash tests conducted by UK-based New Car Assessment Programme (NCAP) in 2013, the government formulated new vehicle safety assessment programme, Bharat New Vehicle Safety Assessment Program (BNVSAP) for the Indian market.

"Accordingly, the penetration of airbags in passenger vehicles (PV) in India is estimated to be around 30-35%. However, with the implementation of BNVSAP norms from October 2017 (for new models) and October 2018 (for existing models), the demand for frontal airbags is likely to increase exponentially", noted ICRA.

At present, airbags are majorly imported in India with Takata, Autoliv, TRW, Toyoda Gosei and Samsung being the key suppliers. However, citing favorable growth prospects, few Indian component manufacturers have also entered the segment through technology tie-up with foreign players.

For instance, while Rane TRW (an established player in the steering system space) has started assembly of airbags at its unit in Chennai, Abhishek Auto Industries has entered into collaboration with US-based KSS to set-up a unit in India.

The domestic passenger vehicle market is expected to grow to 3.64 million units by March 31, 2019 compared to 2.78 million units the industry saw last financial year.

ICRA estimates India's airbag penetration level to increase to about 90%, or little under three times its current status. As of today only a handful of players such as Volkswagen and Toyota provide airbags on all models and variants. Other manufacturers offer airbags as an option.

The cost of airbags excluding sensors wiring harness is expected to be about Rs 6,000-7,000 per vehicle, as per estimates. Cost of PVs are expected to go up significantly with such safety addition and subsequent switch over Bharat Stage VI (BSVI) emission norm.

"Our discussion with industry participants suggest that import content in airbags stands at 60-80% at present is unlikely to decline significantly over the next 2-3 years as localization of key components (especially inflators) would require sizeable investments", ICRA stated.

Similarly cost of two-wheelers will also likely increase from April 2018 as ABS will have to be offered as standard. This will be preceded by a switchover to BSIV from April 2017.

"According to Government's recent notification, ABS will be made mandatory in all the new models (with engine size above 125cc) from April 2018 onwards, while 2Ws below 125cc can either have ABS or Combined Braking System (CBS). For all the existing models, the deadline stands at April 2019", ICRA added.